Business

Gen Y able to afford land in the ACT? Think again.

I have today been told by Colliers International, the multinational corporation handling the release, that they are under orders from the ACT Government to tell people that house block prices start between $300,000 and $400,000 in the new Molonglo land development.

Canberra has a young population. Given that most land in Canberra to be released over the next 30 years will be in this district, how will anyone from the younger generations afford those prices without getting themselves into too much debt?

Land in new outer suburbs is barely affordable now. This is an early indication to me that there will be no more affordable land in the ACT – leaving me with the impression that the powers that be care very little about land supply and affordability.

Adding insult to injury, the ACT Government’s 2010 homebuyer concession applies to land valued at $194,800 or less; $100,000-200,000 short of starting block prices in Molonglo.

It now seems that the 60,000-70,000 future residents of Molonglo all be cashed-up baby boomers – renting out their older properties to younger folks caught in the rent trap. I am not opposed to wealthy enclaves – but future land should be available to the common man, not just aristocrats.

If these early price indications are true, then it will only deepen the current intergenerational cost disadvantage flagged in the Government’s Intergenerational Report.

Cashed up baby boomers started out with three mortgages to buy their first home for under $20,000 and had to work – YES BLOODY WORK – three jobs to pay the mortgages while the wife stayed at home and looked after the kids. There was none of this cotton wool wrapped work life balance. So if the new generation want to buy a property actually costing relatively the same amount as way back then they should get off there backsides and work instead of complaining. Low unemployment means more jobs for them to occupy to buy there house. Stop whining and start working.
So called cashed up Baby Boomer – I’ll be working till I’m 70.

Funny.
My grandparents bought a 7 bedroom mansion in inner Melbourne for about 4x my grandfathers wage (average job). They had 7 kids. My grandmother never worked a day in her life and retired fairly well off.
My parents bought a house in inner south Canberra for about three times my fathers wage (fair to middling job), with a loan from the ACT government. The same house is now worth about 12 times the average wage. My mother didn’t work until she was over 40.

What’s all this about hard work?

I’m quite happy to pay a fair whack of my money for a house (most likely in a shit location) but the stranglehold on land being released by the ACT government and the prices are ridiculous.

While a government may be able to set a lower price on blocks, this would also upset the balance of the market, leading to a reduction in the asset value of landowners and a financial crisis, which would in turn increase unemployment, lower incomes, and mean that Gen Y could still not afford the housing you want them to have.

Bring it on.

Far from precipitating a financial crisis it would fuel a building boom and pave the way for vast future prosperity for young people who’d be able to afford to buy instead of facing a life on the rental treadmill. For existing owner-occupiers it’d make no difference whatsoever; the value of the family house is entirely irrelevant – what matters is the changeover value. If I sell my house I still need somewhere to live – if I get half the previous value for the sale but only have to pay half the previous value for the purchase, I’ve lost nothing.

People with investment properties would have a problem, but that’s the nature of investment – it carries risks. The immense future benefits would outweigh any disadvantage many times over.

Thanks Pete74au – maybe you know something none of us do? Baby boomers worked three jobs to get a mortgage. Really, did they need to do that when you could buy a house for $30,000? My father (a BB) earned? $22,000 a year (the average income at that stage was probably around $30,000) a year when I was growing up. My mother didn’t work, she stayed home. And they were able to buy a house.

Oh, and if you think we’re all just sitting around, drinking beer, watching the world go by and crying about how we can’t afford a house think again. I work, I earn about $90,000 a year and have some savings. I applied for a bank loan – do you know what the bank said.My credit limit was $247,000. Do you know where I can buy a house for $247,000 in Canberra? You don’t, neither do I.

So, shut – up. Stop slamming Gen Ys / Xs. Because we do work hard and we can’t raise a family on one average income alone. My parents are luck enough to own their own home.

I’ve only lived here a year, but it feels like all the huge tracts of land around the ACT are released for development at a dribble’s pace, despite a bursting population. Nearly every property that I’ve looked at is owned by some baby boomer trying to profit off of the dysfunctional renter’s market, while development is stalled by the same baby boomers in order to preserve the pristine bush around the city, mostly so that they can have a lovely bike ride past the roos. My impression has surely been spoiled by my frustrating experience as a renter, but Canberra seems far too small to justify Sydney and Melbourne home prices when the land is sitting there all around us.

Yep, Prajapati has the right idea – just bulldoze all that pesky bushland and build, build, build… that’ll solve the problem. Not.

Cashed up baby boomers started out with three mortgages to buy their first home for under $20,000 and had to work – YES BLOODY WORK – three jobs to pay the mortgages while the wife stayed at home and looked after the kids. There was none of this cotton wool wrapped work life balance. So if the new generation want to buy a property actually costing relatively the same amount as way back then they should get off there backsides and work instead of complaining. Low unemployment means more jobs for them to occupy to buy there house. Stop whining and start working.
So called cashed up Baby Boomer – I’ll be working till I’m 70.

So you expect a generation living in completely different social and economic circumstances to act exactly the way you did when you were young? That’s a recipe for disaster.

The current crop of youngsters get benefits and advantages that didn’t exist in times gone by. One of the things they don’t have, though, is cheap housing. There are still affordable properties, but after 10 years of no property stagnation followed by 10 years of boom, people aren’t thinking about it the same way.

I think we need to stop getting all stressed about owning property, and think more seriously about longer term renting. I’d be quite happy to offer multiple year leases on my investment properties, if someone actually asked for one.

Cashed up baby boomers started out with three mortgages to buy their first home for under $20,000 and had to work – YES BLOODY WORK – three jobs to pay the mortgages while the wife stayed at home and looked after the kids. There was none of this cotton wool wrapped work life balance. So if the new generation want to buy a property actually costing relatively the same amount as way back then they should get off there backsides and work instead of complaining. Low unemployment means more jobs for them to occupy to buy there house. Stop whining and start working.
So called cashed up Baby Boomer – I’ll be working till I’m 70.

So you expect a generation living in completely different social and economic circumstances to act exactly the way you did when you were young? That’s a recipe for disaster.

Cashed up baby boomers started out with three mortgages to buy their first home for under $20,000 and had to work – YES BLOODY WORK – three jobs to pay the mortgages while the wife stayed at home and looked after the kids. There was none of this cotton wool wrapped work life balance. So if the new generation want to buy a property actually costing relatively the same amount as way back then they should get off there backsides and work instead of complaining. Low unemployment means more jobs for them to occupy to buy there house. Stop whining and start working.
So called cashed up Baby Boomer – I’ll be working till I’m 70.

It seems that what some older people here fail to realise, is that they just couldn’t make it in today’s market.

As in, you had it good, things are just a bit shit now, it’s a little harder, and, well if you tried, you’d fuck it up, trust me. This isn’t the 1970’s any longer. Mortgages can’t be done in under 20 years, they can’t be done with your savings intact, and they sure can’t be done on a single income.

Now, mind you, that doesn’t mean that it cannot be done at all. I know quite a few people who are used to living on $90.00 pw who aren’t fazed about mortgages. However, although this does not bother them, at the same time, I am aware that a lot of people would gawk at the prospect. Strange thing is, those same people who would gawk are the ones whining about generation y.

Heaps of people can’t afford to purchase homes but live and survive quite well and comfortably renting in decent locations.
Sometimes because they don’t manage money well, get into the market at the “right” time for them (not the market) or want only places with locations that are unrealistic to their budgets.

As a member of Gen Y I am sick of everyone assuming we are all partying and wasting money. I am well aware that until I finish studying I will have no chance of saving for a house and actually I would prefer a small house as I have an aversion to housecleaning. Although I would like a tiny back garden so I can grow veges a bit like the garden of the granny flat I rent now. I would also like to live on a public transport route as I hate driving in traffic.
I don’t smoke, drink or have a plasma screen tv and so I would have to find other ways to economise if I wanted to buy a house. As it is I am supporting myself while studying.
However I think that I will be stuck in the rental market for many years to come, until perhaps the baby boomers and others move into retirement homes and we can knock down the huge houses they live in and create smaller townhouses that accommodate more people in a smaller area.
I am also surprised that no one has brought up one of the reasons that I in particular hate renting, that you can only have a contract for a year or so and then if the owner wants they can move you on. From no fault of my own I had to move 3 times in 2 years and now crave the security of my own home. It would be nice if you could have contracts for 3-4years then at least you would have some security.

My parents built the home I grew up in 1969. They borrowed $18,000. They were able to do that because they had a 20% deposit – which they borrowed as a separate loan and combined with their savings of around 5%. The loan was based solely on my father’s income because despite my mum being a high school teacher the banks wouldn’t consider her income because she was a woman (who naturally would be expected to leave the work force and become a stay at home mum as soon as she got pregnant). They didn’t buy in the neighbourhood that they grew up in, or even in a neighbourhood that they would have been their first preference – it was a neighbourhood that they could afford.

My partner and I bought our first house in Canberra in 2001. We saved for around two years to get the 20% deposit. Not to avoid loan insurance, but because the banks wanted to see a track record of saving before they would consider lending to us.

I have no doubt that for first home buyers today it’s a daunting task to consider a mortgage of $450,000 or $500,000 for a home of their own. But it’s always been a big thing. It’s always been a big ask and required a big sacrifice for most ordinary people.

I think there’s truth on both sides of this. As a Gen X who did who have a lot of fun when younger, at times I regret not having put my head down when I was younger – because I often feel that I’ve missed the boat housing-wise.

I agree with Jim Jones when he says there are other valid types of investment, but our population as a whole is so poorly educated when it comes to financial matters (among other things – I don’t think having a Uni degree necessarily makes people educated) that most of us take the same course of action on this as our parents did.

I don’t agree that many Gen Y or Gen X expect 4bed, 2 bathroom houses on a silver platter. In fact, I think many would jump at the chance to either live in or fix up the old “renovators delights”. But the regulations around housing offered these days are stricter than they were 25-30 years ago. In some cases it’s a good thing (e.g energy efficiency) but every time we lift that bar, we price up the bottom end of the market in terms of what can be used to build with, and how it can be done.

But in a very turbulent world, I’m beginning to wonder if staying mobile might be a good thing in the long run – if you are a home-owner, it is a helluva lot harder to move on if your local economy gets hit by a recession or the like, because you are trying to sell out at the same time as many others (the Latrobe Valley in Victoria is a good example).
Here’s a Canadian point of view on this that is arguably just as relevant to us:

On the plus side, I think that Johnboy has a very strong point too. For many Baby Boomers, the family home IS their superannuation, many (especially women) do not have much else put aside. What is going to happen to housing values in many areas when these properties have to be sold in order to pay for nursing home beds and the like?

And one final thing. There appears to be a delusion in Australia that just because we have had a good economic run, the good times will flow on forever. Tied in with this is an idea that we will continue to be able to attract large numbers of skilled migrants. Both attitudes rest on the assumptions that these trends will continue ad infinitum.

When either of these things happen (ie nursing home payments and/or a proper downturn, we will see a market correction where prices come back down towards the long-term average that people can afford to pay.

God im sick of people complaining about not being able to afford a house! .. you can do it you just need to make sacrifices … if you cant do that, then stop your whinging and rent for the rest of your life or move to goulburn or yass?

I’m single income, pretty much average ACT wage, just bought a renovated 4br ensuite house in Belco. 900m2+ block around the 1/2 mill mark. 10% deposit, .. whereas I see double income couples of the gen Y demographic saying they cant afford a house? … fuck that, I’m a gen Y too, I’m 30

that comes out to about $650 per week according to ye olde mortgage calculator. add in insurance, rates, maintanence and its and easy $725 per week.

55,000 per annum (your take home) comes to 1057 per week. minus 725 (a very conservative estimate at a time when interest rates are very low and rising fast) equals $332 per week to cover everything. car breaks down, kids get sick, food, clothes, medicine, internet, computer – everything on $332 per week.

hey, what happens if interest rates go up by 1%? your base repayment goes to $720 per week, your total expenses go to about $800 per week. now you’re down to 260 or so to live on. if interest rates go up by 2%? well now your mortgage repayments alone are nearly $800 per week. can you live on $180 per week? probably, if you don’t have any kids, if you don’t get sick, if you don’t lose your job and are unemployed for more than 3 days at a go.

let’s face it. you are heavily leveraging yourself into a market that has tripled in price in the past 10 years. you are, whether you acknowledge or not, taking on an enormous amount of risk. you may turn out ok in the end. but i guess that if you don’t and everything goes to shit you will be first in line blaming the gov’t and demanding measures to support house prices simply because you made a shitty choice.

if you only have a 50k deposit you have no business buying a 500k house. sorry bub. you deserve to lose your shirt.

I’m single income, pretty much average ACT wage, just bought a renovated 4br ensuite house in Belco. 900m2+ block around the 1/2 mill mark. 10% deposit, .. whereas I see double income couples of the gen Y demographic saying they cant afford a house? … fuck that, I’m a gen Y too, I’m 30

Well gee, too bad for people who are on less than the average wage. I suppose they don’t deserve to get into the property market and can all go to hell can they? By the way, if you’re now 30, you’re probably more accurately described as Generation X than Generation Y. I’d also like to point out that when you were first able to enter the market, you were pretty well positioned towards the beginning of the bubble, giving you a pretty considerable advantage over people entering the market now.

if you actually look at the numbers pertaining to housing affordability (income, inflation, house prices and interest rates to name a few), people in the property market 15+ years ago had it considerably better than we do now.

Economic analysis supports your point – the inflation of the market has greatly outstripped wage and cost of living inflation.

But no one here is interested in ‘facts’, they get in the way of whining about how all young people are crap, and how much harder it was back when I was young, pull yourself up by the bootstraps, blah blah blah.

Amendments to give renters more rights have passed the Legislative Assembly. It will be easier for renters to keep a pet, make minor modifications to their rental property, and to break a lease without incurring significant costs https://t.co/UG9YEv9ilQ(7 hours ago)